Kenya now finds itself in a tricky diplomatic situation following refusal by Tanzania to sign the comprehensive Economic Partnership Agreement (EPA) between East African Community (EAC) and the European Union. This means the country faces the prospect of paying heavily for exports to Europe if EAC fails to beat the October 1 deadline. Exporters to Europe are now staring at higher tariffs that could attract more than Sh100 million in tax weekly, similar to what the country went through in 2014. Although members of the European Parliament attending the recently concluded Unctad meeting in Nairobi gave hope of an extension of the October deadline to sign EPA, the conflict in Burundi, a member of the EAC, now adds to the mix of headaches for Kenya. The MPs said since Burundi is on the verge of being sanctioned by the European Union over political instability, Kenya will find it hard to clinch the deal that provides relief from heavy taxes for the country’s exports to Europe. EU chair of joint delegation of Trade and Development Committee Bernd Lange said Kenya would be the biggest casualty should the two scenarios persist and the EPA is not signed. “Our first proposal is to have the October 1st deadline extended to allow for more time and see whether Tanzania will agree to sign or if Burundi will improve her democratic situation and evade sanctions from the European Union,” Mr Lange said. “If none of these happen, then I expect that Kenya will apply for...

Regional industries are struggling to remain afloat amid an onslaught from imports of finished goods. The manufacturing sector growth has remained depressed at an average of 4.7 per cent annually in recent years, and its contribution to GDP has continued to shrink to less than 10 per cent in the East African Community countries, save for Tanzania. Industrialists attribute this to the region’s exportation of raw materials and importation of finished goods, a trend that is suffocating local companies. Many have scaled down their operations and others have closed shop. About 70 per cent of the leather produced in the region is exported as raw, wet blue and crust, while tanneries continue to operate at less than 40 per cent of capacity due to lack of a reliable supply of raw materials. In the pharmaceutical industry, East African manufacturers account for only 30 per cent of the market share, with imports commanding 70 per cent. Scaled down business Over the past five years, a number of regional companies — Eveready East Africa, Sameer, Kuguru Foods — have shut down their operations. Although the region has identified strategic industries such as chemicals, plastics and paints, automotive, agro-food, pharmaceuticals and cosmetics, cotton, textile and apparel and leather and footwear as key to the growth of manufacturing, regional companies account for only about 20 per cent of the products on the market. “We are importing stuff we can produce,” said Ali Mufuruki, Infotech Investment Group chairman and chief executive officer. “We need to...

Public debt in most sub-Sahara Africa will continue to balloon as governments borrow to finance infrastructure projects unless private sector investments increase, experts have warned. In East Africa, governments are on a borrowing spree to finance key infrastructure projects in transport, energy, water and sanitation. But a new report by the World Bank says that only increased participation by private investors in these projects will help countries close the infrastructure financing deficit. Estimates by the World Bank show that sub-Sahara Africa requires about $100 billion annually to invest in infrastructure projects in order to accelerate economic growth by as much as 2.6 percentage points per year. But the continent is only able to mobilise half of this financing through borrowing, bilateral agreements, domestic revenues, development financial institutions and public-private partnerships, leaving a massive deficit. However, governments can close this gap by creating an environment that allows for private investors to pump resources into projects. Financing complexities Currently, private participation in infrastructure projects in Africa is extremely low, largely due to limited public sector capability, insufficient political will, policy uncertainty and a weak regulatory environment. Private investors have also shunned the continent due to financing complexities attributable to narrow financial markets, higher actual and provisional risks, longer project durations, significant cost overruns and currency mismatches. While countries like Brazil and Turkey have managed to attract $433 billion and $124 billion in private capital respectively, sub-Sahara has only managed to mobilise $77 billion over the past decade. “Many transformational projects have enormous...

East Africa’s stock exchanges are finding it difficult to convince small and medium-sized companies to sell their shares to the public, as many of them are family-owned and not ready for the strict regulations and public scrutiny. Nairobi Securities Exchange and Dar es Salaam Stock Exchange have listed just five companies each since the launch of the SME trading platforms five years ago, while Rwanda Securities Exchange and Ugandan Securities Exchange have not attracted any listings to their SME segments. Executive director of the Rwanda Capital Markets Authority Robert Mathu said family-owned businesses are reluctant to undergo scrutiny. “In as much as the requirements for SME listing are lighter, we expect some very basic fundamental things to be put in place including a minimum of three directors of which 30 per cent (one director) must be independent,” Mr Mathu told The EastAfrican. “We have been talking to the SMEs. The biggest challenge is change of behaviour, but this is inevitable because we are a capital market. They need to open up to people who want to give them money,” he added. Challenges Ugandan Securities Exchange launched its Growth Enterprise Market Segment (Gems) in 2013. Charles Nsamba, the communications manager at the Uganda Capital Markets Authority, said the challenge has been the informal nature of the SMEs and the requirement for proper corporate governance structures and book keeping standards. “We have come to the realisation that this needs to be addressed, and in the 10-year master plan that is to be...

Uncertainty is hanging over the fate of Rift Valley Railways (RVR) after Kenya ushered in a new era in rail transport with the commissioning of the standard gauge railway. By all accounts, the start of operations of the SGR marks the ultimate demise of the 118-year-old metre gauge railway operated by RVR despite the company maintaining it is still in business and determined to compete. But with Kenya Railways having terminated the RVR concession agreement in March and Uganda also working towards the same fate, RVR is clinging to hope of remaining in operation even when it is clear the future of rail transport in the region is standard gauge railway-based. The EastAfrican has established that Kenya Railways (KR) has started the process of repossessing all the concessioned assets while Kampala gave RVR a notice of intent to terminate the concession which expired. A notice to terminate is awaiting the signature of the Finance minister. “We are on the route to termination. Kampala is following on the same route as Kenya but the two countries are not at the same level as regards the notices issued to the concessionaire,” said a senior official at Uganda Railways Corporation. But, according to RVR chief executive officer Isaiah Okoth, the notices of termination cannot take effect until the company exhausts all the options available to salvaging the concession. He added that it is premature for KR to take over the assets because RVR still has options to salvage the concession if it manages...

China has said it is ready to finance the construction of the standard gauge railway from Kisumu in Kenya to Uganda and Rwanda as long as the three countries agree to handle the project jointly. According to Beijing, such an agreement among the three countries would minimise political risks and plug missing links. There have been fears that the viability of the SGR within Kenya and beyond could be undermined by failing to link landlocked countries to the Mombasa port because of financial or other considerations. Chinese Prime Minister Li Keqiang told Kenyan President Uhuru Kenyatta at the China Africa Summit in Beijing two weeks ago to discuss the extension of the railway line from Kisumu to Kampala and then Kigali with Presidents Yoweri Museveni and Paul Kagame. Kenya State House spokesman Manoah Esipisu said Mr Li was clear that China would fund those sections as a regional project. “The president already spoke with the leaders of Uganda and Rwanda on the possibility of sending a joint team to negotiate for financing of the remaining portion,” said Mr Esipisu. He said Kenya was now waiting for Kampala and Kigali’s response before planning an SGR beyond Kisumu. “The viability of the (Nairobi to Kisumu) the line is okay. One feature of the SGR investment to Kisumu is the building of a modern port there. Kisumu to Malaba is viable with Uganda and Rwanda on board,” Mr Esipisu said. Difficult terrain On May 31, President Uhuru Kenyatta launched the operations of the first...

Kenya will from January start issuing four-day transit visas allowing foreign passengers on Kenya Airways awaiting connection flights at the Jomo Kenyatta International Airport to exit for shopping and sightseeing. Passengers on layovers — a break between two flights taking passengers to their final destination — will receive a 96-hour transit visa, up from the current 72. The move is expected to boost Kenya Airways and local travel industry as well as increase the attractiveness of JKIA as a transit port. “Kenya to issue 96hr transit visas for passengers on Kenya Airways to visit our country,” announced Jacinta Nzioka, marketing director, Magical Kenya, through her twitter account. The bulk of Kenya Airways’ passengers from its African routes use JKIA as a transit port to cities in Asia and Europe. Source: Business Daily

The Tanzanian government has reiterated that foreigners, including nationals of other East African Community (EAC) member states, must use passports to gain entry into the country. This was stated by Deputy Minister for Foreign Affairs and East African Cooperation, Dr Susan Kolimba, in response to concerns on the issue, raised by some East African Legislative Assembly (EALA) members on the matter. She told the House that the laws of the country had to be adhered to, among which were those related to immigration. Ms Susan Nakawuki (from Uganda) had wondered why Tanzania didn't allow citizens of other members of the regional bloc to use Identification Cards at border-crossing points. She urged Tanzania to follow in the footsteps of Kenya, Uganda and Rwanda, which formalized the use of IDs, thereby easing movement of people from one partner state to the other. "Crossing to Rwanda, for example, is a pleasant experience, as all one needs is an ID. This reflects an EAC spirit. Why shouldn't Tanzania adopt it ?" the MP queried. Dr Kolimba pointed out that Tanzania wasn't part of the agreement that the three countries had struck, and would therefore stick to the passportrelated formality. Commenting on the issue, the EALA Speaker, Mr Dan Kidega, said concerns were related largely less to legislators but more to ordinary people whose cross-border movements should be made easier. He said the provision for free movement of people in the region should be fast-tracked. In her rejoinder, Ms Kolimba said the issue would be...

The European Union has signed two Financing Agreements for a total amount of 68 million Euros to finance implementation of two programmes in the COMESA region. These are; Trade Facilitation programme (53 million Euros) and Small Scale Cross-Border Trade programme (15 million Euros). The Ambassador of the European Union to Zambia and Representative to COMESA, H.E. Alessandro Mariani, and COMESA Secretary General, Sindiso Ngwenya, signed the two agreements. The funds are part of the COMESA specific envelope of 85 million euros provided by the European Union under the 11th European Development Fund (EDF) Regional Indicative Programme for the East African, Southern African and Indian Ocean (EA-SA-IO) region signed in June 2015 for the period 2014 – 2020. The trade facilitation programme is meant to reduce the cost of doing business and moving goods in the COMESA region. The programme has identified five key priority areas for support, namely; monitoring and resolution of Non-Tariff Barriers (NTBs); implementation of the World Trade Organization – Trade Facilitation Agreement; coordinated border management and trade and transport facilitation along selected corridors and border posts. Others are the implementation of harmonized, science based Sanitary and Phyto-sanitary (SPS) and Technical Standards and support to trade negotiations/promotion covering trade in services, free movement of persons and trade negotiations. The beneficiaries of the programme will primarily be the Member States of COMESA and the private sector/traders in the COMESA/Tripartite region, with the COMESA Secretariat playing a coordination and facilitation role. The programme on small-scale cross-border trade aims at increasing...

The EALA members passed the resolution after receiving and debating a report on sensitisation activities in partner states, themed: ‘EAC Integration Agenda: Accessing the Gains. ” Under Speaker Dan Kidega, members from the five countries adopted, with few amendments, the general recommendations put before them by the team that issued the joint report after each country had compiled its anecdote. The members of the report compilation team are Tanzania’s Nderakindo Kessy, Kenya’s Judith Pareno, Ugandan Chris Opaka-Okumu and Ms Patricia Hajabakiga of Rwanda. Moving the motion in the House, Ms Hajabakiga argued that a conclusion was needed on the report annex regarding the harmonisation and mutual recognition of academic and professional qualifications. The EALA called for the synchronisation of immigration laws in all partner states in terms of work permits and free movement of persons. “There is need to provide similar Certificate of Origin at all EAC custom border posts to ease trade and avoid forgeries. Let the Summit of Heads of State upgrade Kiswahili as one of the EAC official languages,” she said. The MP further underscored the need to address fear of loss of employment through deliberate measures like facilitation of skilful nationals in Kiswahili, English and French languages to take up teaching positions in the needy partner states and develop specific programmes for unskilled labour and small and medium entrepreneurs. “We have to develop an EAC strategy for development of skills and competitiveness to boost productivity through vocational training, science and technology as well as expedite harmonisation...